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AMCIL LIMITED

ABN 57 073 990 735

APPENDIX 4E STATEMENT FOR THE YEAR ENDED 30 JUNE 2016

• Results for announcement to the market

Media Release

• Appendix 4E Accounts

• Independent Audit Report

These documents comprise the preliminary final report given to ASX under Listing Rule 4.3A

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The reporting period is the year ended 30 June 2016 with the previous corresponding period being the year ended 30 June 2015.

This report is based on audited financial statements. A copy of the audit report can be found on page 35.

Results for announcement to the market

Net Profit attributable to members was $7.7 million, up 10.1% from the previous corresponding period.
Revenue from ordinary activities (excluding capital gains) was $7.1 million, down 15.2% from the previous corresponding period. The previous corresponding period included $0.9m of demerger dividend from the BHP Billiton demerger of South32.
Net tangible assets at 30 June 2016 were 93 cents per share, up from 91 cents at the end of the previous corresponding period, in both cases before allowing for any final or special dividend.
No interim dividend was paid to shareholders in respect of the half year ended 31 December 2015.
AMCIL’s policy is to maximise the distribution of available franking credits. In accordance with this policy, a final dividend of 3.5 cents per share, fully-franked, will be paid on 25 August 2016 to ordinary shareholders on the register on 9 August 2016. Last year’s final dividend was 4.0 cents. Shares are expected to trade ex-dividend from 8 August 2016. There is no conduit foreign income component of the dividend.
There are no “LIC capital gains” attached to the final dividend this year.
The Company’s Dividend Reinvestment Plan (DRP) is in operation for the final dividend, the price for which will be set at a 2.5% discount to the Volume Weighted Average Price of the Company’s shares traded on the ASX and Chi-X automated trading systems over the five trading days after the shares trade ex-dividend. The last date for receipt of an election notice for participation in the plan is 10 August 2016. All shares issued under the DRP will rank equally with existing shares.
The 2016 AGM will be held at the RACV City Club, Melbourne, at 1.30 PM on Wednesday 12 October.

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MEDIA RELEASE - RESULT SUMMARY TO 30 JUNE 2016

AMCIL’s investment style seeks to have a focused portfolio of the better opportunities in large, mid and small companies in Australia and New Zealand.
Full Year Profit increased 10.1% to $7.7 million.
Dividend is 3.5 cents per share fully franked.
Twelve month portfolio return was 7.6%, including franking it was 9.7%. (The S&P/ASX 200 benchmark return with franking was 2.2%).
Share Purchase Plan which raised $7.2 million in March.
Management expense ratio is 0.65%.

Profit and Dividend

Profit for the year is $7.7 million, up on last year’s result of $7.0 million. Last year’s profit figure included a non-cash dividend of $0.9 million received as a result of the demerger of South32 from BHP Billiton. Excluding this figure the profit was up 26.7%

The Company’s dividend policy is to maximise the distribution of available franking credits each year. Accordingly, AMCIL will pay a final dividend of 3.5 cents per share fully franked which is down on the 4.0 cents per share paid last year.

AMCIL’s management expense ratio improved to 0.65%. AMCIL’s portfolio is managed internally and does not charge portfolio performance fees which leads to lower costs for shareholders.

Portfolio returns remain strong

The Company’s portfolio returns have benefited from its increased exposure to mid and smaller companies which have substantially outperformed larger companies over the year. AMCIL’s total portfolio return which includes dividends paid was 7.6%. This compares with the S&P/ASX 200 Accumulation Index return which was 0.6%. Given AMCIL’s dividend policy seeks to maximise the distribution of franking credits, including those arising from taxable realised gains, it is appropriate to add franking credits to total returns. On this basis, assuming the full benefit of franking credits, AMCIL’s portfolio delivered a return of 9.7% whereas the S&P/ASX 200 Accumulation Index return was 2.2%.

Some of the best performing stocks over the twelve month period were Mayne Pharma, Treasury Wine, TPG Telecom, iProperty (which was taken over by REA Group), Citadel Group, Vocus Communications and Lifestyle Communities. Of the larger companies in the portfolio CSL and Brambles also delivered strong returns to the portfolio, given their exposure to attractive markets globally and Transurban which has benefited from strong investor interest in the current low interest rate environment.

Ongoing adjustments lead to more small and mid-cap holdings in the Portfolio

The Australian economy is providing a number of headwinds for larger companies which are facing slower growth and increased competition in mature markets. On the other hand many smaller companies are finding opportunities to expand in more innovative and growing segments, either in Australia or internationally.

In this context, a number of new companies were added through the twelve month period. These included Mainfreight, Ardent Leisure, OzForex Group, Amcor, Seek, ASG Group and Wellcom Group. AMCIL also added to existing holdings in Mayne Pharma (through its recent rights issue and placement), Healthscope and AMA Group.

These purchases were funded from cash raised through the share purchase plan in March and the sale of holdings predominantly of larger companies. These included a reduction in the Westpac and Commonwealth Bank positions, the complete sale of the holding in Santos and reduced exposures to Oil Search, BHP Billiton and Telstra. Takeovers also provided some additional funds.

These changes have seen a significant transformation in the AMCIL’s portfolio over the year with small and mid-cap company holdings increasing from 37% of the total portfolio to 61% over the twelve month period.

Going Forward

The Australian market has been trading in a range for quite some time with periods of high volatility. This reflects a number of factors.

Business conditions in Australia are patchy and at the same time increasing competition is making it harder for larger companies to generate meaningful profit growth. There is uncertainty about economic change in China and disappointing growth in most developed countries despite extraordinarily low interest rates. Recent political events in the UK and Australia have also had an unsettling effect on the local market.

In contrast low interest rates are still driving demand for equites, in some circumstances, leading to very high valuation levels in some sectors of the market as investors seek returns. However in this environment any profit setbacks often trigger marked falls in share prices.

AMCIL with its investment approach in focusing on what it believes to be the better growth prospects across quality companies in the market, is well placed to make further adjustments to the portfolio as opportunities arise. However we are also conscious of the wide difference in valuation levels across sectors and companies, which means a prudent approach is also warranted.

Please direct any enquiries to:

Ross Barker Geoff Driver Managing Director General Manager (03) 9225 2101 (03) 9225 2102

26 July 2016

MAJOR TRANSACTIONS IN THE INVESTMENT PORTFOLIO

Acquisitions (above $2 million)	Cost
	$’000
Mainfreight*(Listed on the New Zealand Stock Exchange)	6,115
Mayne Pharma Group	4,535
Ardent Leisure Group*	3,925
OzForex Group*	3,758
Healthscope	3,634
Amcor*	3,556
Seek*	3,503
ASG Group*	3,177
Wellcom Group*	3,008
IRESS*	2,945
Woodside Petroleum*	2,927
Freedom Foods Group*	2,879
Vocus Communications*	2,685
Gateway Lifestyle Group*	2,602
Australian Agricultural Company*	2,459
Nufarm*	2,392
AMA Group	2,194
Paragon Care*	2,144

New to the portfolio

Disposals (above $2 million)	Proceeds
	$’000
Oil Search	6,161
Telstra Corporation	5,719
Westpac Banking Corporation	5,253
Commonwealth Bank of Australia	4,822
iProperty Group# (Takeover by REA Group Limited)	4,400
Brickworks#	4,017
Asciano#	3,975
Santos#	3,834
BHP Billiton	3,750
Veda Group# (Takeover by Equifax)	3,214
Energy Developments# (Takeover by DUET EDL Pty Limited)	3,200
Sims Metal Management#	3,054
Computershare#	2,631
AMP	2,630
iSelect#	2,416
Broadspectrum# (Takeover by Ferrovial Services Australia Pty Limited)	2,318
Vicinity Centres#	2,223

Complete Disposal

TOP INVESTMENTS AS AT 30 JUNE 2016

Includes investments held in both the Investment and Trading Portfolios

Valued at closing prices at 30 June 2016

1
Brambles*
2
CSL
3
Mayne Pharma Group
4
Commonwealth Bank of Australia
5
TPG Telecom
6
Lifestyle Communities
7
Mainfreight
8
Treasury Wine Estates
9
Qube Holdings
10
Transurban Group
11
Oil Search
12
James Hardie Industries
13
QBE Insurance Group
14
Incitec Pivot
15
Healthscope
16
Japara Healthcare
17
National Australia Bank
18
The Citadel Group
19
Sonic Healthcare
20
Fisher & Paykel Healthcare Corporation
As % of Total Portfolio
(excludes Cash)

Total Value
% of
$ '000
Portfolio
10,514
4.5%
9,199
3.9%
9,090
3.9%
8,924
3.8%
7,795
3.3%
7,627
3.3%
7,080
3.0%
7,016
3.0%
6,630
2.8%
6,295
2.7%
6,277
2.7%
6,237
2.7%
5,632
2.4%
5,131
2.2%
5,040
2.2%
4,884
2.1%
4,832
2.1%
4,808
2.1%
3,990
1.7%
3,961
1.7%
130,960
56.1%

*** Indicates that options were outstanding against part of the holding. Cash position at 30 June 2016 - $7.4 million**

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PORTFOLIO PERFORMANCE TO 30 JUNE 2016

	1 YEAR	3 YEARS %PA	5 YEARS %PA	10 YEARS %PA
*PORTFOLIO RETURN- NET ASSET BACKING INCLUDING DIVIDENDS* *REINVESTED*	*7.6%*	*8.1%*	*9.7%*	*9.1%*
S&P/ASX 200 ACCUMULATIONINDEX	0.6%	7.7%	7.4%	4.9%

*PORTFOLIO GROSS RETURN- NET ASSET BACKING INCLUDING* DIVIDENDS REINVESTED*	*9.7%*	*11.1%*	*12.3%*	*11.4%*
S&P/ASX 200 GROSSACCUMULATIONINDEX*	2.2%	9.3%	9.1%	6.4%

Note: AMCIL’s portfolio return is calculated after management fees, income tax and capital gains tax on realised sales of investments. It should also be noted that Index returns for the market do not include the impact of management expenses or tax.

*Incorporates the benefit of franking credits for those who can fully utilise them.

AMCIL Ltd Annual Financial Statements

30 June 2016

FINANCIAL STATEMENTS CONTENTS

10	Financial Statements	28
10	Income statement	28
11	Statement of comprehensive income	28
12	Balance sheet	28
13	Statement of changes in equity	29
15	Cash flow statement	29
		29
		30

Additional Information

D. Balance Sheet Reconciliations D1 Current assets – cash D2 Credit facilities D3 Revaluation reserve D4 Realised capital gains reserve D5 Retained profits D6 Share capital

16	Notes to the financial statements	31	E. Income statement reconciliati
16	A. Understanding AMCIL’s Financial Performance	31	E1 Reconciliation of net cash flow
16	A1 How AMCIL manages its capital		operating activities to profit
16	A2 Investments held and how they are measured	31	E2 Tax reconciliations
19	A3 Operating income
20	A4 Dividends paid	33	F. Other Information
21	A5 Earnings per share	33	F1 Related Parties
		33	F2 Remuneration of auditors
22	B. Costs, Tax and Risk	33	F3 Segment reporting
22	B1 Management Costs	34	F4 Summary of other accounting
22	B2 Tax		policies
24	B3 Risk
27	C. Unrecognised Items
27	C1 Contingencies

E. Income statement reconciliations E1 Reconciliation of net cash flows from operating activities to profit E2 Tax reconciliations

Financial statements

Income Statement for the Year Ended 30 June 2016

		2016	2015
	Note	$’000	$’000
Dividends and distributions	A3	6,906	7,883
Revenue from deposits and bank bills		146	425
Other revenue		14	23
Total revenue		7,066	8,331
Net gains on trading portfolio		2,476	134
Income from options written portfolio		847	440
Income from operating activities		10,389	8,905
Finance Costs		(73)	(65)
Administration expenses	B1	(1,474)	(1,485)
Profit before income tax expense		8,842	7,355
Income tax expense	B2, E2	(1,155)	(375)
Profit for the year		7,687	6,980
		Cents	Cents
Basic earnings per share	A5	3.10	2.93

This Income Statement should be read in conjunction with the accompanying notes.

Statement of Comprehensive Income for the Year Ended 30 June 2016

		Year to 30	June 2016		Year to 30 June 2015	Year to 30 June 2015
	Revenue1	Capital1	Total	Revenue	Capital	Total
	$’000	$’000	$’000	$’000	$’000	$’000
Profit for the year	7,687	-	7,687	6,980	-	6,980
Other Comprehensive
Income
Gains/(losses) for the period	-	9,976	9,976	-	(289)	(289)
Deferred tax expense on above	-	(3,041)	(3,041)	-	(210)	(210)
Total Other Comprehensive	-	6,935	6,935	-	(499)	(499)
Income
Total Comprehensive Income	7,687	6,935	14,622	6,980	(499)	6,481

1 ‘Capital’ includes realised or unrealised gains or losses (and the tax on those) on securities in the investment portfolio. Income in the form of distributions and dividends is recorded as ‘Revenue’. All other items, including expenses, are included in Profit for the Year, which is categorised under ‘Revenue’.

None of the items included in other comprehensive income will be recycled through the Income Statement.

This Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Balance Sheet as at 30 June 2016

Balance Sheet as at 30 June 2016
		2016	2015
	Note	$’000	$’000
Current assets
Cash	D1	7,375	12,973
Receivables		981	955
Trading portfolio		157	547
Total current assets		8,513	14,475
Non-current assets
Investment portfolio	A2	233,537	207,642
Total non-current assets		233,537	207,642

Total assets		242,050	222,117
Current liabilities
Payables		3,139	1,037
Tax payable		1,226	1,684
Options Sold	A2	229	186
Total current liabilities		4,594	2,907
Non-current liabilities
Deferred tax liabilities	E2	44	7
Deferred tax liabilities – investment portfolio	B2	16,119	13,533
Total non-current liabilities		16,163	13,540
Total liabilities		20,757	16,447

Net Assets		221,293	205,670
Shareholders' equity
Share capital	A1, D6	168,556	157,880
Revaluation reserve	A1, D3	25,620	22,661
Realised capital gains reserve	A1, D4	4,485	7,064
Retained profits	A1, D5	22,632	18,065
Total shareholders' equity		221,293	205,670

This Balance Sheet should be read in conjunction with the accompanying notes.

Statement of Changes in Equity for the Year Ended 30 June 2016

Year Ended 30 June 2016

				Realised
		Share	Revaluation	Capital	Retained
	Note	Capital	Reserve	Gains	Profits	Total
		$’000	$’000	$’000	$’000	$’000
Total equity at the beginning of		157,880	22,661	7,064	18,065	205,670
the year
Dividends paid	A4	-	-	(3,628)	(6,047)	(9,675)
Shares issued under Dividend	D6	3,513	-	-	-	3,513
Reinvestment Plan
Shares issued under Share	D6	7,215	-	-	-	7,215
Purchase Plan
Other share capital adjustments		(52)	-	-	-	(52)
Total transactions with		10,676	-	(3,628)	(6,047)	1,001
shareholders
Profit for the year		-	-	-	7,687	7,687
Other Comprehensive Income (net
of tax)
Net gain for the period on		-	6,935	-	-	6,935
investments
Other ComprehensiveIncome for the		-	6,935	-	-	6,935
year
Transfer to Retained Profits of cumulative non-taxable gains on		-	(2,927)	-	2,927	-
investments sold
Transfer to Realised Capital Gains		-	(1,049)	1,049	-	-
Reserve of cumulative taxable gains
on investments sold
Total equity at the end of the		168,556	25,620	4,485	22,632	221,293
year

This Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Statement of Changes in Equity for the Year Ended 30 June 2016 (continued)

Year Ended 30 June 2015

				Realised
		Share	Revaluation	Capital	Retained
	Note	Capital	Reserve	Gains	Profits	Total
		$’000	$’000	$’000	$’000	$’000
Total equity at the beginning of the		145,598	28,296	12,810	15,028	201,732
year
Dividends paid	A4	-	-	(9,123)	(5,702)	(14,825)
Shares issued under Dividend	D6	5,531	-	-	-	5,531
Reinvestment Plan
Shares issued under Share Purchase	D6	6,805	-	-	-	6,805
Plan
Other share capital adjustments		(54)	-	-	-	(54)
Total transactions with shareholders		12,282	-	(9,123)	(5,702)	(2,543)
Profit for the year		-	-	-	6,980	6,980
Other Comprehensive Income (net of
tax)
Net loss for the period on investments		-	(499)	-	-	(499)
Other Comprehensive Income for the		-	(499)	-	-	(499)
year
Transfer to Retained Profits of cumulative non-taxable gains on		-	(1,759)	-	1,759	-
investments sold
Transfer to Realised Capital Gains		-	(3,377)	3,377	-	-
Reserve of cumulative taxable gains
on investments sold
Total equity at the end of the year		157,880	22,661	7,064	18,065	205,670

This Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Cash Flow Statement for the Year Ended 30 June 2016

		2016	2015
		$’000	$’000
		Inflows/	Inflows/
	Note	(Outflows)	(Outflows)
Cash flows from operating activities
Sales from trading portfolio		10,482	1,124
Purchases for trading portfolio		(7,030)	(1,258)
Interest received		146	481
Proceeds from entering into options in options written		1,148	628
portfolio
Payment to close out options in options written portfolio		(257)	(1)
Dividends and distributions received		5,717	7,270
		10,206	8,244
Other receipts		14	23
Administration expenses		(1,552)	(1,508)
Finance costs paid		(73)	(65)
Income taxes paid		(581)	(340)
Net cash inflow/(outflow) from operating activities	E1	8,014	6,354
Cash flows from investing activities
Sales from investment portfolio		78,530	45,049
Purchases for investment portfolio		(91,693)	(51,745)
Tax paid on capital gains		(1,450)	(4,156)
Net cash inflow/(outflow) from investing activities		(14,613)	(10,852)
Cash flows from financing activities
Shares issued		10,728	12,336
Share issue transaction costs		(52)	(54)
Dividends paid		(9,675)	(14,825)
Net cash inflow/(outflow) from financing activities		1,001	(2,543)
Net increase/(decrease) in cash held		(5,598)	(7,041)
Cash at the beginning of the year		12,973	20,014
Cash at the end of the year	D1	7,375	12,973

For the purpose of the cash flow statement, ‘cash’ includes cash and deposits held at call.

This Cash Flow Statement should be read in conjunction with the accompanying notes.

Notes to the financial statements

A. Understanding AMCIL’s financial performance

A1. How AMCIL manages its capital

AMCIL’s objective is to provide shareholders with attractive total returns including strong capital growth over the medium to long term and to pay fully franked dividends.

AMCIL recognises that its capital will fluctuate with market conditions. In order to manage those fluctuations, the Board may adjust the amount of dividends paid, issue new shares, buy back the Company’s shares or sell assets to settle any debt.

AMCIL’s capital consists of its shareholders’ equity plus any net borrowings. A summary of the balances in equity is provided below:

	2016	2015
	$’000	$’000
Share capital	168,556	157,880
Revaluation reserve	25,620	22,661
Realised capital gains reserve	4,485	7,064
Retained profits	22,632	18,065
	221,293	205,670

Refer to notes D3-D6 for a reconciliation of movement for each equity account from period to period.

A2. Investments held and how they are measured

AMCIL has three portfolios of securities: the investment portfolio, the options written portfolio and the trading portfolio. Details of all holdings (except for specific option holdings) as at the end of the reporting period can be found at the end of the Annual Report.

The investment portfolio holds securities which the company intends to retain on a long-term basis. The options written portfolio and trading portfolio are held for short-term trading only. The latter is relatively small in size when utilised. The options written portfolio can contain both call and put options and call options are only written over securities held in the investment portfolio.

The balance and composition of the investment portfolio was:

	2016	2015
	$’000	$’000
Equity instruments (at market value)	233,537	207,642
	233,537	207,642

The fair value (the price at which the option may be bought) at 30 June of the securities in the options written portfolio was:

Call options	229	186
	229	186

If all call options were exercised, this would lead to the sale of $13.0 million worth of securities at an agreed price – the ‘exposure’ (2015: $13.3 million).

$2.8 million of shares are lodged with ASX Clear Pty Ltd as collateral for sold option positions written by the Company (2015: $3.1 million). These shares are lodged with ASX Clear under the terms of ASX Clear Pty Ltd which require participants in the Exchange Traded Option market to lodge collateral, and are recorded as part of the Company’s investment portfolio.

How investments are shown in the financial statements

The accounting standards set out the following hierarchy for fair value measurement:

Level 1: quoted prices in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices, which can be observed either directly (as prices) or indirectly (derived from prices)

Level 3: inputs for the asset or liabilities that are not based on observable market data

All financial instruments held by AMCIL are classified as Level 1 (other than an immaterial amount of call options and the Company’s investment in the unlisted security Hexima, which is Level 2). Their fair values are initially measured at the costs of acquisition and then remeasured based on quoted market prices at the end of the reporting period.

Net tangible asset backing per share

The Investment Committee regularly reviews the net asset backing per share both before and after provision for deferred tax on the unrealised gains in AMCIL’s long-term investment portfolio. Deferred tax is calculated as set out in note B2. The relevant amounts as at 30 June 2016 and 30 June 2015 were as follows:

	30 June	30 June
	2016	2015
Net tangible asset backing per share	$	$
Before tax	0.93	0.91
After tax	0.87	0.85

Equity investments

The shares in the investment portfolio are designated under the accounting standards as financial assets measured at fair value through ‘other comprehensive income’ (“OCI”), because they are equity instruments held for long-term capital growth and dividend income, rather than to make a profit from their sale. This means that changes in the value of these shares during the reporting period are included in OCI in the statement of comprehensive income. The cumulative change in value of the shares over time is then recorded in the Revaluation Reserve. On disposal, the amounts recorded in the revaluation reserve are transferred to the realisation reserve or to retained profits.

Options

Options are classified as financial assets or liabilities at fair value through profit and loss and usually have an expiry date within twelve months from the date that they are sold. Options written are initially brought to account at the amount received upfront for entering into the contract (the premium) and subsequently revalued to current market value.

Securities sold and how they are measured

During the period $78.3 million (2015 : $45.0 million) of equity securities were sold. The cumulative gain on the sale of securities was $4.0 million for the period after tax (2015: $5.1 million). This has been transferred from the revaluation reserve to retained profits and the realisation reserve (See Statement of Changes in Equity). These sales were accounted for at the date of trade.

Where securities are sold, any difference between the sale price and the cost is transferred from the Revaluation Reserve to the Realisation Reserve or, for any difference between the accounting gain and the taxable gain, to Retained Profits and the amounts noted in the Statement of Changes in Equity. This means the Company is able to identify the realised gains out of which it can pay a ‘Listed Investment Company’ (LIC) gain as part of the dividend, which conveys certain taxation benefits to many of AMCIL’s shareholders.

The realised gain or loss on options written is not recognised until the option expires, is exercised or is closed out. All unrealised gains or losses which represent movements in the Market Value of the options are recognised through the Income Statement.

A3. Operating income

The total income received from AMCIL’s investments in 2016 is set out below.

Dividends and distributions	2016	2015
	$’000	$’000
Dividends from securities held in investment portfolio at 30 June	6,006	7,196
~~I~~nvestment securities sold during the year	895	687
Dividends from securities held in trading portfolio at 30 June	-	-
Trading securities sold during the year	5	-
	6,906	7,883

Dividends from listed securities are recognised as income when those securities are quoted in the market on an ex-distribution basis. Dividends from unlisted securities are recognised as income when they are received. Capital returns on ordinary shares are treated as an adjustment to the carrying value of the shares.

Trading income & non-equity investments

Net gains on the trading and options portfolio are set out below.

Net gains
Net realised gains from trading portfolio	2,436	93
Realised gains on options written portfolio	750	364
Unrealised gains from trading portfolio	40	41
Unrealised gains on options written portfolio	97	76
	3,323	574

A4. Dividends paid

The dividends paid and payable for the year ended 30 June 2016 are shown below:

	2016	2015
	$’000	$’000
(a) Dividends paid during the year
Final dividend for the year ended 30 June 2015 of 4 cents fully franked at
30%, paid 25 August 2015 (2015: 2.5 cents plus a special dividend of 4	9,675	14,825
cents, both fully franked at 30%, paid on 26 August 2014).
	9,675	14,825
(b) Franking credits
Balance on the franking account after allowing for tax payable in respect of
the current year’s profits and the receipt of dividends recognised as
receivables	3,842	4,390
Impact on the franking account of dividends declared but not recognised as
a liability at the end of the financial year:	(3,820)	(4,146)
Net available	22	244
These franking account balances would allow AMCIL to frank additional	51	569
dividend payments up to an amount of:

AMCIL’s ability to continue to pay franked dividends is dependent upon the receipt of franked dividends from the trading and investment portfolios and on AMCIL paying tax.

(c) Dividends declared after balance date

Since the end of the year Directors have declared a final dividend of 3.5 cents per share fully franked at 30%. The aggregate amount of the final dividend for the year to 30 June 2016 to be paid on 25 August 2016, but not recognised as a liability at the end of the financial year is:

	8,914
(d) Listed Investment Company capital gain account	2016 $’000	2015 $’000
Balance of the Listed Investment Company (LIC) capital gain account	2,290	4,857
This equates to an attributable amount of	3,270	6,938

Distributed LIC capital gains may entitle certain shareholders to a deduction in their tax return, as set out in the dividend statement. LIC capital gains available for distribution are dependent on the disposal of investment portfolio holdings that qualify for LIC capital gains, or the receipt of LIC distributions from LIC securities held in the portfolios.

A5. Earnings per share

The table below shows the earnings per share based on the profit for the year:

Basic Earnings per share	2016	2015
	Number	Number
Weighted average number of ordinary shares used as the denominator	248,177,004	237,898,108
	$’000	$’000
Profit for the year	7,687	6,980
	Cents	Cents
Basic earnings per share	3.10	2.93

Dilution

As there are no options, convertible notes or other dilutive instruments on issue, diluted earnings per share is the same as basic earnings per share.

B. Costs, Tax and Risk

B1. Management Costs

The total management expenses for the period are as follows:

	2016	2015
	$’000	$’000
Administration fees paid to AICS	(780)	(768)
Other administration expenses	(694)	(717)

Administration fees paid to AICS

Australian Investment Company Services Limited (“AICS”) undertakes the day-to-day administration of AMCIL’s investments and its operations, including financial reporting.

Other administration expenses

A major component of other administration expenses is Directors’ remuneration. This has been summarised below:

	Short Term	Post-	Total $
	Benefits $	Employment
		Benefits $
2016
Directors	302,345	39,559	341,904
2015
Directors	296,134	54,866	351,000

AMCIL recognises Directors’ retirement allowances that have been crystallised as ‘amounts payable’. There are no further retirement allowances that will need to be expensed.

Detailed remuneration disclosures are provided in the Remuneration Report.

The Company does not make loans to Directors.

B2. Tax

AMCIL’s tax position, and how it accounts for tax, is explained here. Detailed reconciliations of tax accounting to the financial statements can be found in note E2.

The income tax expense for the period is the tax payable on this financial year’s taxable income, adjusted for any changes in deferred tax assets and liabilities attributable to temporary differences and for any unused tax losses. Deferred tax assets and liabilities (except for those related to the unrealised gains or losses in the investment portfolio) are offset, as all current and deferred taxes relate to the Australian Taxation Office and can legally be settled on a net basis.

A provision has been made for taxes on any unrealised gains or losses on securities valued at fair value through the Income Statement – i.e. the trading portfolio, puttable instruments, convertible notes that are classified as debt and the options written portfolio.

A provision also has to be made for any taxes that could arise on sale of securities in the investment portfolio, even though there is no intention to dispose of them. Where AMCIL disposes of such securities, tax is calculated according to the particular parcels allocated to the sale for tax purposes, offset against any capital losses carried forward.

Tax expense

The income tax expense for the period is shown below:

(a) Reconciliation of income tax expense to prima facie tax payable

	2016	2015
	$’000	$’000
Profit before income tax expense	8,842	7,355
Tax at the Australian tax rate of 30% (2015 – 30%)	2,653	2,207
Tax offset for franked dividends	(1,423)	(1,539)
Tax effect of sundry items not taxable in calculating taxable income	(18)	(260)
	1,212	408
Over provision in prior years	(57)	(33)
Total tax expense	1,155	375

Deferred tax liabilities – investment portfolio

The accounting standards require us to recognise a deferred tax liability for the potential capital gains tax on the unrealised gain in the investment portfolio. This amount is shown in the Balance Sheet. However, the Board does not intend to sell the investment portfolio, so this tax liability is unlikely to arise at this amount. Any sale of securities would also be affected by any changes in capital gains tax legislation or tax rate applicable to such gains when they are sold.

	2016	2015
	$’000	$’000
Deferred tax liabilities on unrealised gains in the investment portfolio	16,119	13,533
Opening balance at 1 July	13,533	14,770
Tax on realised gains	(455)	(1,447)
Charged to OCI for ordinary securities on gains or losses for the period	3,041	210
	16,119	13,533

B3. Risk

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

As a Listed Investment Company that invests in tradeable securities, AMCIL can never be free of market risk as it invests its capital in securities which are not risk free – the market price of these securities will fluctuate.

A general fall in market prices of 5% and 10%, if spread equally over all assets in the investment portfolio, would lead to a reduction in AMCIL’s comprehensive income of $8.2 million and $16.3 million respectively, at a tax rate of 30% (2015 : $7.3 million & $14.5 million). A market fall of 5% and 10% across the Trading Portfolio & Options Written Portfolio would lead to an increase in profit after-tax of $2,500 and $5,000 respectively (2015 :$13,000 and $26,000 decrease). The Revaluation Reserve at 30 June 2016 was $25.6 million (2015 : $22.7 million). It would require a fall in the value of the investment portfolio of 15.7% after tax to fully deplete this (2015 : 15.6%).

AMCIL seeks to reduce market risk at the investment portfolio level by ensuring that it is not, in the opinion of the Investment Committee, overly exposed to one company or one particular sector of the market. The relative weightings of the individual securities and the relevant market sectors are reviewed by the Investment Committee and risk can be managed by reducing exposure where necessary. AMCIL does not have a minimum or maximum amount of the portfolio that can be invested in a single company or sector.

AMCIL’s investment exposure by sector is as below:

	2016	2015
	%	%
Energy	3.10%	8.39%
Materials	9.39%	12.66%
Industrials	18.63%	13.97%
Consumer Discretionary	9.19%	5.90%
Consumer Staples	7.80%	4.40%
Banks	6.57%	13.83%
Other Financials (incl. property trusts)	12.13%	10.55%
Telecommunications	6.12%	7.75%
Healthcare	18.76%	11.23%
Other – Info Technology & Utilities	5.25%	5.45%
Cash	3.06%	5.87%

There were no securities representing over 5% of the combined investment and trading portfolio (including options) at 30 June 2016.

AMCIL is not currently materially exposed to interest rate risk as all its cash investments are short-term for a fixed interest rate. AMCIL is also not directly materially exposed to currency risk as most of its investments are quoted in Australian dollars.

The writing of call options provides some protection against a fall in market prices as it generates income to partially compensate for a fall in capital values. Options are only written against securities that are held in the trading or investment portfolios although stock may be purchased on-market to meet call obligations.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. AMCIL is exposed to credit risk from cash, receivables, securities in the trading portfolio and securities in the investment portfolio respectively. None of these assets are overdue. The risk in relation to each of these items is set out below.

Cash

All cash investments not held in a transactional account are invested in short-term deposits with Australia’s “Big 4” commercial banks or their wholly-owned subsidiaries or in cash management trusts managed by those subsidiaries. In the unlikely event of a bank default or default on the underlying securities in the cash trust, there is a risk of losing the cash deposits and any accrued unpaid interest.

Receivables

Outstanding settlements are on the terms operating in the securities industry, which usually require settlement within two days of the date of a transaction. Receivables are non-interest bearing and unsecured. In the event of a payment default, there is a risk of losing any difference between the price of the securities sold and the price of the recovered securities from the discontinued sale.

Trading and investment portfolios

Converting and convertible notes or other interest-bearing securities that are not equity securities carry credit risk to the extent of their carrying value. This risk will be realised in the event of a shortfall on winding-up of the issuing companies.

Liquidity risk

Liquidity risk is the risk that an entity will not be able to meet its financial liabilities.

AMCIL monitors its cash-flow requirements daily. The Investment Committee also monitors the level of contingent payments on a regular basis by reference to known sales and purchases of securities, dividends and distributions to be paid or received, put options that may require AMCIL to purchase securities, and facilities that need to be repaid. AMCIL ensures that it has either cash or access to short-term borrowing facilities sufficient to meet these contingent payments.

AMCIL’s inward cash flows depend upon the dividends received. Should these drop by a material amount, AMCIL would amend its outward cash-flows accordingly. AMCIL’s major cash outflows are the purchase of securities and dividends paid to shareholders, and both of these can be adjusted by the Board and management. Furthermore, the assets of AMCIL are largely in the form of readily tradeable securities which can be sold on-market if necessary.

The table below analyses AMCIL’s financial liabilities into relevant maturity groupings. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is not significant.

	Less than	6-12	Greater	Total	Carrying
	6 months	months	than 1	contractual	amount
			year	cash flows
30 June 2016	$’000	$’000	$’000	$’000	$’000
Non-derivatives
Payables	3,139	-	-	3,139	3,139
Options written*	-	-	-	-	229
	3,139	-	-	3,139	3,368
30 June 2015
Non-derivatives
Payables	1,037	-	-	1,037	1,037
Options written*	-	-	-	-	186
	1,037	-	-	1,037	1,223

In the case of call options, there are no contractual cash flows as if the option is exercised the contract will be settled in the securities over which the option is written. The contractual cash flows for put options written are the cash sums the Company will pay to acquire securities over which the options have been written, and it is assumed for purpose of the above disclosure that all options will be exercised (i.e. maximum cash outflow).

C. Unrecognised items

Unrecognised items, such as contingencies, do not appear in the financial statements, usually because they don’t meet the requirements for recognition. However, they have the potential to have a significant impact on the company’s financial position and performance.

C1. Contingencies

Directors are not aware of any material contingent liabilities or contingent assets other than those already disclosed elsewhere in the financial report.

Additional information

Additional information that shareholder may find useful is included here. It is grouped into three sections:

D Balance sheet reconciliations

E Income statement reconciliations F Other information

D. Balance sheet reconciliations

This section provides further information about the basis of calculation of line items in the financial statements.

D1. Current assets – cash

	2016	2015
	$’000	$’000
Cash at bank and in hand (including on-call)	7,375	12,973
	7,375	12,973

Cash holdings yielded an average floating interest rate of 2.09% (2015: 2.66%). All cash investments not held in a transactional account or an over-night ‘at call’ account are invested in short-term deposits with Australia’s “Big 4” commercial banks or their wholly-owned subsidiaries, all rated ‘AA-’ by S&P which have a maturity of three months or less or in cash management trusts managed by those subsidiaries which invest predominantly in securities with an A1+ rating.

D2. Credit Facilities

The Company was party to agreements under which Commonwealth Bank of Australia would extend cash advance facilities.

	2016	2015
	$’000	$’000
Commonwealth Bank of Australia –cash advance facility	10,000	10,000
Amount drawn down at 30 June	-	-
Undrawn facilities at 30 June	10,000	10,000

Repayment of facilities is done either through the use of cash received from distributions or the sale of securities, or by rolling existing facilities into new ones. Facilities when utilised are usually drawn down for no more than three months.

D3. Revaluation reserve

	2016	2015
	$’000	$’000
Opening Balance at 1 July 2015	22,661	28,296
Gains/(losses) on investment portfolio	9,976	(289)
Deferred tax on above	(3,041)	(210)
Transfer to retained profits for non-taxable realised gains	(2,927)	(1,759)
Transfer to realised capital gains reserve for taxable realised gains	(1,049)	(3,377)
	25,620	22,661

This reserve is used to record increments and decrements on the revaluation of the investment portfolio as described in accounting policy note A2.

D4. Realised capital gains reserve

	2016	2015
	$’000	$’000
Opening balance at 1 July	7,064	12,810
Dividends paid	(3,628)	(9,123)
Cumulative taxable realised gains for period through OCI (net of tax)	1,049	3,377
	4,485	7,064

This reserve records gains or losses after applicable taxation arising from disposal of securities in the investment portfolio as described in A2.

D5. Retained profits

	2016	2015
	$’000	$’000
Opening balance at 1 July	18,065	15,028
Dividends paid	(6,047)	(5,702)
Profit for the year	7,687	6,980
Transfer from revaluation reserve for realised non-taxable gains	2,927	1,759
	22,632	18,065

This reserve relates to past profits.

D6. Share capital

Date	Details	Notes	Number	Issue	Paid-up
			of shares	price	Capital
			’000	$	$’000
1/7/2014	Balance		228,077		145,598
26/8/2014	Dividend Reinvestment Plan	i	5,885	0.94	5,531
26/11/2014	Share Purchase Plan	ii	7,912	0.86	6,805
Various	Costs of issue		-		(54)
30/6/2015	Balance		241,874		157,880
25/8/2015	Dividend Reinvestment Plan	i	4,133	0.85	3,513
4/3/2016	Share Purchase Plan	ii	8,693	0.83	7,215
Various	Costs of issue		-		(52)
30/6/2016	Balance		254,700		168,556

i. Shareholders elect to have all or part of their dividend payment reinvested in new ordinary shares under the Dividend Reinvestment Plan (DRP). The price of the new DRP shares is based on the average selling price of shares traded on the Australian Securities Exchange (ASX) & Chi-X in the five days after the shares begin trading ex-dividend.
ii. During the year ended 30 June 2015 the Company announced a Share Purchase Plan (SPP). The SPP issue price was set at a 2.5% discount to the volume-weighted average price of AMCIL shares traded on the Australian Securities Exchange (ASX) & Chi-X over the 5 trading days up to, and including, the day on which the SPP offer was scheduled to close
iii. During the year ended 30 June 2016 the Company announced a Share Purchase Plan (SPP). The SPP issue price was set at a 2.5% discount to the volume-weighted average price of AMCIL shares traded on the Australian Securities Exchange (ASX) & Chi-X over the 5 trading days up to, and including, the day on which the SPP offer was scheduled to close.

All shares have been fully paid, rank pari passu and have no par value.

E . Income statement reconciliations

E1. Reconciliation of net cash flows from operating activities to profit

	2016	2015
	$’000	$’000
Profit for the year	7,687	6,980
Net decrease/(increase) in trading portfolio	390	(547)
Increase/(decrease) in options written portfolio	43	186
Dividends received as securities under DRP investments	(576)	(376)
Decrease/(increase) in current receivables	(26)	100
- Less increase/(decrease) in receivables for investment portfolio	-	-
Increase/(decrease) in deferred tax liabilities	2,623	(1,173)
- Less (increase)/decrease in deferred tax liability on investment portfolio	(2,586)	1,237
Increase/(decrease) in current payables	2,102	678
- Less decrease/(increase) in payables for investment portfolio	(2,180)	(700)
Increase/(decrease) in provision for tax payable	(458)	(2,740)
-Less CGT provision	(455)	(1,447)
- Add taxes paid on capital gains	1,450	4,156
Net cash flows from operating activities	8,014	6,354
E2. Tax reconciliations
Tax expense composition
Charge for tax payable relating to the current year	1,175	344
Over provision in prior years	(57)	(33)
Increase in deferred tax liabilities – investment portfolio	37	64
	1,155	375
Amounts recognised directly through Other Comprehensive Income
Net movement in tax liabilities relating to capital gains tax on the
movement in gains in the investment portfolio	3,041	210
	3,041	210

Deferred tax assets & liabilities

The deferred tax balances are attributable to:

		2016	2015
		$’000	$’000
(a)	The difference in the value of the trading portfolio for tax	(12)	(12)
	and accounting purposes
(b)	Tax on unrealised gains in the options written portfolio	(53)	(23)
(c)	Provisions and expenses charged to the accounting profit	76	99
	which are not yet tax deductible
(d)	Interest and dividend income receivable which is not	(55)	(71)
	assessable for tax until receipt
		(44)	(7)

Movements:

Opening asset/(liability) balance at 1 July	(7)	57
Credited/(charged) to Income statement	(37)	(64)
	(44)	(7)

Deferred tax assets arise when provisions and expenses have been charged but are not yet tax deductible. These assets are realised when the relevant items become tax deductible, as long as enough taxable income has been generated to claim the assets against, and as long as there are no changes to the tax legislation that affect AMCIL’s ability to claim the deduction.

The portion of deferred tax liability likely to be reversed within the next 12 months is $45,000 (2015: $106,000). This relates primarily to items described in items (a), (b) and (d) above.

F. Other information

This section covers other information that is not directly related to specific line items in the financial statements, including information about related party transactions, assets pledged as security and other statutory information.

F1. Related parties

All transactions with deemed related parties were made on normal commercial terms and conditions and approved by independent Directors.

F2. Remuneration of auditors

During the year the auditor earned the following remuneration:

	2016 $ 2015 $
	PricewaterhouseCoopers Audit or review of financial reports 111,186 109,624 Non-Audit Services Taxation compliance services 11,440 11,164
	Total remuneration 122,626 120,788

F3. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The Board, through its sub-committees, has been identified as the chief operating decisionmaker, as it is responsible for allocating resources and assessing performance of the operating segments.

Description of segments

The Board makes the strategic resource allocations for AMCIL. AMCIL has therefore determined the operating segments based on the reports reviewed by the Board, which are used to make strategic decisions.

The Board is responsible for AMCIL’s entire portfolio of investments and considers the business to have a single operating segment. The Board’s asset allocation decisions are based on a single, integrated investment strategy, and AMCIL’s performance is evaluated on an overall basis.

Segment information provided to the Board

The internal reporting provided to the Board for AMCIL’s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of Australian Accounting Standards, except that net assets are reviewed both before and after the effects of capital gains tax on investments (as reported in AMCIL’s Net Tangible Asset announcements to the ASX).

Other segment information

Revenues from external parties are derived from the receipt of dividend, distribution and interest income, and income arising on the trading portfolio and realised income from the options portfolio.

AMCIL is domiciled in Australia and most of AMCIL’s income is derived from Australian entities or entities that maintain a listing in Australia. AMCIL has a diversified portfolio of investments, with only one investment comprising more than 10% of AMCIL’s income, including realised income from the trading and options written portfolios – Netcomm Wireless (15.7%) in the trading portfolio.

F4. Summary of other accounting policies

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. This financial report has been authorised for issue and is presented in the Australian currency. AMCIL has the power to amend and reissue the financial report.

AMCIL has attempted to improve the transparency of its reporting by adopting ‘plain English’ where possible. Key ‘plain English’ phrases and their equivalent AASB terminology are as follows:

Phrase	AASB Terminology
Market Value	Fair Value for Actively Traded Securities
Cash	Cash & Cash Equivalents
Share Capital	Contributed Equity
Options	Derivatives written over equity instruments that are
	valued at fair value through Profit or Loss

AMCIL complies with International Financial Reporting Standards (IFRS). AMCIL is a ‘for profit’ entity.

AMCIL has not applied any Australian Accounting Standards or AASB Interpretations that have been issued as at balance date but are not yet operative for the year ended 30 June 2016 (“the inoperative standards”) except for AASB 9 which was adopted on 7 December 2009. The impact of the inoperative standards has been assessed and the impact has been identified as not being material. AMCIL only intends to adopt other inoperative standards at the date at which their adoption becomes mandatory.

Basis of accounting

The financial statements are prepared using the valuation methods described in A2. All other items have been treated in accordance with the historical cost convention.

Fair value of financial assets and liabilities

The fair value of cash and cash equivalents, and non-interest bearing monetary financial assets and liabilities of AMCIL approximates their carrying value.

Rounding of amounts

AMCIL is a company of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, relating to the ‘rounding off’ of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Instrument, to the nearest thousand dollars, or in certain cases, to the nearest dollar.